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Report on the Krugerrand Report on the Krugerrand http://www.aluka.org/action/showMetadata?doi=10.5555/AL.SFF.DOCUMENT.acoa000463 Use of the Aluka digital library is subject to Aluka’s Terms and Conditions, available at http://www.aluka.org/page/about/termsConditions.jsp. By using Aluka, you agree that you have read and will abide by the Terms and Conditions. Among other things, the Terms and Conditions provide that the content in the Aluka digital library is only for personal, non-commercial use by authorized users of Aluka in connection with research, scholarship, and education. The content in the Aluka digital library is subject to copyright, with the exception of certain governmental works and very old materials that may be in the public domain under applicable law. Permission must be sought from Aluka and/or the applicable copyright holder in connection with any duplication or distribution of these materials where required by applicable law. Aluka is a not-for-profit initiative dedicated to creating and preserving a digital archive of materials about and from the developing world. For more information about Aluka, please see http://www.aluka.org Report on the Krugerrand Alternative title Report on the Krugerrand Author/Creator Rothmyer, Karen; American Committee on Africa Publisher American Committee on Africa Date 1977-08 Resource type Reports Language English Subject Coverage (spatial) United States, South Africa Coverage (temporal) 1975 - 1977 Source Africa Action Archive Rights By kind permission of Africa Action, incorporating the American Committee on Africa, The Africa Fund, and the Africa Policy Information Center. Description Gold coin. Gold mining industry. Apartheid. Krugerrand. Format extent 4 page(s) (length/size) http://www.aluka.org/action/showMetadata?doi=10.5555/AL.SFF.DOCUMENT.acoa000463 http://www.aluka.org AMERICAN COMMITTEE ON AFRICA AMERICAN COMMITTEE ON AFRICA PCPOT ON T IKUFMPATID The Krugerrand is a coin containing one troy outce of gold, marketed by South Africa primarily to small investors in Europe and the U.S. Some coins also are sold in the form of pendants ard other jewelry. The value of the Kruerrand, wh'ch is not used as legal tender in South Africa, risei and falls with the international price of go!,-currently about 1150 an ounce. The gold for the coins comes from South Africa's h8 mines, controllcd by seven major financial groups of which the largent is Anglo-American Corporation. All gold mines are nem1)ers of the South African Charber of Mines, an industry organization which recruits African labor, refines all gold, and sells all the bullion produced to the government, which in turn mana-ges all international sales. The Chamber of lines, throuigh its marketing arm, International Gold Corp. Ltd., is in charge of international Krugerrand saleS, which are accomplished througi distributors in each country. Krn,!7errands in the US. In the fal) of 197I, Krugerrand advertisements featuring slcgans lih. "the world'- best way tc' om gold" and "an ounce of pure love" bo-ar tn sl-.up on U.S. television and in all major nevspapers. The ads, part of a I million campaign undertaken by South Africa's Chamber of 'ines, qick:; fck:l their mar:: sales jumped to thousands of coins a week, and hundreds of ban'L and stores, as well as all offiecs of Merrill Lynch Pierce renner 9: SmitL. In.. the country's largest brokerage firm, rushed to stock Kr'-errands for saJ7 7: gifts or simply to those looking for a safe investment. In response, many groups opposed to South Africa's whdte minority "e', 'ndertcok a campaign of their own, using deonstrations and cthpr e1rIns to coivitce the public that by selling or rmning Krugerrands, they were directly supporting apartheid. The campaign, still in orogress, has not led ti- P ee osation of K'mgerrand sales, but it has made for a national awareness o' the issues involved, and bj so doing, has hei 'htened understandir, of the Tuth African situation. Anon , the -ore notable siccesses of the anti-?Kru,-errwrd fcre's t% 'a-- KRUGERRAND 2. have been the passage of resolutions by city councils in Denver, Colorado; San Antonio, Texas; Chicago, Illinois; and Dayton, Ohio; urging citizens not to purchase the coins. The National Council of Churches, representing most major Protestant denominations, issued a letter to dealers opposing Krugerrand sales, while the National Conference of Mlack Lawyers prepared a brief arguing against Krugerrand commercils which was submitted to the New York affiliate of one of the three major television networks then airing such ads. Elsewhere, stores in Oakland, California; Brooklyn, New York; and Cleveland, Ohio; agreed to stop selling Krugerrands after picketing by anti-apartheid groups. In Chicago, black- owned Seaway National Bank stopped selling Krugerrands after discussions with a silnilar groun there. The Role of Gold in -r th Africa's Development. Gold has beer the pri mary basis of South Africa's development since its discovery in 1886, playing a central role in shaping South African society. Gold sales overseas traditionally have financed the imports needed for South Africa's rapid industrialization, in the past few years covering about onethird of the total import bill. The gold mining industry itself has played an important role in stinralating the country's internal economy, including the direct employment of about h% of the total work force. In recent ye-irs, gold sales have been of particular concern to South Africa, embarked as it has been on a massive industrialization plan designed to make the country invulnerable to outside economic pressure in an increasingly hostile world. Harry Oppenheimer, head of Anglo-American Corp., South Africa's largest business enterprise, and a major gold-mine operator, has been quoted as saying "A comparatively high gold price (has become) positively necessary for the country's well being." (Wall Street Journal, September 8, !971%) The benefits of go!u production have not, of course, accrued equally to all sectors of the South &11rican population. To provide cheap labor for the mines, Africans we-e driven off their land, herded into "Native Reserves," forced onto the labor 7arket by taxes, and rigidly controlled by the imposition of pass laws, whi:'h regimented the labor flow. In 1975, the last year for which a racial breakdown is available, of 377,924 persons employed in the gold mining industry, 37,762 were white and 339,680 were Africans. "old mining accounts for over half of all mining employment. Current average monthly salaries for whites employed in mining is $563, compared with 3124 for blacks (New York Times, July 29, 1977) -well below the bare minimum of about q150 a month calculated by the University of Port Elizabeth to be necessary for an urban African family. (Financial Nail May 25, 1977). Moreover, the gap between white and black mining wages is the highest in any industry in the country. In return for their low salaries, black miners work under highly dangerous and umhealthy conditions. Between 1972 and 1,75, according to a University of Cape Town study, there were 2,993 accidental deaths in the mines, and 110,169 serious injuries. (Financial Mail, October 29, 1976) FRUGRRAND 3. International Gold Situation. Until a few years ago, gold enjoyed undisputed primacy in international trade and finance. All major countries continually sought to add to their gold reserves to back their currencies, which were translatable into gold at fixed prices, while gold remained in steady demand for jewelry and industrial purposes. South Africa, with about 65% of the world's known reserves and responsible for about three-fourths of Western production, could depend on a certain market for its primary product. During this period, South Africa annually minted small numbers of Krugerrands for sale to coin collectors. More recently, however, while industrial and related demand has remained high -- rising 44% in 1976 to equal total world supplies of 1,360 tons (Drexel Burnham Lambert, Inc., Gold Investment Review, April 1977) significant decisions have led to a demonetization of gold, that is, to a reduction in its significance as a medium of exchange and to considerable fluctuations in world prices. In 1968 the seven-nation International Gold Pool introduced a two-tier price system under which an official price of $35 an ounce was set on monetary transactions, but an open market price was permitted for all other transactions, accomplished mainly through the Zurich and London exchanges. In 1973, all official prices were abolished except for purposes of valuing reserves. Meanwhile, the US in 1971 terminated the convertibility of US dollars into gold in official transactions and the International Monetary Fund introduced Special Drawing Rights, for use in international transactions, which were tied to the value of the dollar (later to a group of currencies) but not exchangeable for gold. Both the US Treasury and the IMF subsequently made decisions to sell off substantial amounts of their gold reserves. (The major IMF sale of 25 million ounces will continue through 1980.) Accompanying these changes have been sharp variations in world gold prices. Between 1974 and 1976, gold prices rose to a high of nearly $200 an ounce, then plunged to $110 an ounce, before gradually starting to climb back to the current price of about 150 an ounce. In 1976, the value of South Africa's net gold output declined to R2.35 billion, down 7.6% from the prior year. Meanwhile, imports needed for the government's self-sufficiency program helped to boost imports to R7.43 billion while exports other than gold reached only R4.84 billion. (SA Reserve Bank figures.) The South African government, which taxes all gold produced, received only R396 million in gold taxes in 1976, compared with R629 million in 1975.
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